AFP
CTP · Question #476
(Topic 5) Company RST is a seasonal retailer who has just completed its holiday season and is temporarily flush with cash. The treasurer has identified approximately $15 million of excess balances…
The correct answer is B. Purchase low-risk, short-term investments yielding 2%. See the full explanation below for the reasoning.
Question
- (Topic 5)
Company RST is a seasonal retailer who has just completed its holiday season and is temporarily flush with cash. The treasurer has identified approximately $15 million of excess balances and is trying to determine what to do with the surplus cash. Cash forecasts show that the funds will be needed in approximately 30 days to replenish inventory. Which of the following plans should the treasurer implement immediately?
Options
- ALeave the funds in RST's bank account earning an ECR of 1%.
- BPurchase low-risk, short-term investments yielding 2%.
- CPrepay a $15 million, 5% loan maturing in 1 year.
- DBuy a long-term, highly rated investment paying 2.10%.
How the community answered
(60 responses)- A12% (7)
- B80% (48)
- C3% (2)
- D5% (3)
Community Discussion
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